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M&A

Clarifying questions in an M&A case

Someone asked on Oct 17, 2018 - 4 answers

The underlying reason for an acquisiton always helps to understand the motivations of the client and come up with synergies to consiser. Although, is it appropriate to ask this as a clarifying questin or better ask while discussing the company analysis as part of the structure?

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Sidi replied on Oct 17, 2018
McKinsey Engagement Manager & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 60+ candidates secure MBB offers

Hi Anonymous,

I have a clear view on this: the motivation for the considered move definitely has to be part of your clarifiying questions! Imperatively! I even would argue that it is impossible to carve out a meaningful and specific structure for such go/no go- cases without verifying the underlying objective first.

Your structure then needs to be rooted in the clients precise question and the corresponding criterion to answer this question (which, by pure logic, can only be defined if your know the motivation/objective).

Cheers, Sidi

Vlad replied on Oct 17, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

Yes, definitely! You should understand:

  1. The real reasons for the acquisition
  2. Timeline for integration
  3. Expectations for synergies

In case of PE Acquisition you need also know:

  1. Synergies with the current portfolio
  2. Exit $ expectation
  3. Exit time

Best!

Francesco replied on Oct 18, 2018
#1 Expert for coaching sessions (2.100+) | Ex BCG | 1.000+ reviews with 100% recommendation rate

Hi Anonymous,

I agree with Vlad, Sidi and Elias, it is a better idea to clarify the goal of the acquisition upfront. Knowing the goal from the beginning allows to have a structure more clearly fitting the objective of the client, and ensures you don't forget to ask this question later on.

In general terms, you can always ask at the beginning questions related to:

  1. Understand how the business model of the client works
  2. Clarify the elements that were not clear in the prompt
  3. Identify the goal and the constraints of the client to achieve it

Best,
Francesco

Elias
Expert
replied on Oct 17, 2018
Experienced strategy consultant, now running own consulting business

Sure you can ask, especially if you frame the question like you did "to understand the motivations of the client and come up with synergies to consider". You'll either get an answer (good), or the interviewer will tell you to proceed without an answer or speculate for yourself...

But I don't believe it would be a question that can "hurt" you.

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